KALAMAZOO, MI -- The Douglass Community Association is in danger of closing within 30 days due to financial difficulties, but the board chairman says it "is fighting tooth and nail" to keep the organization alive.

"Financial challenges" led the
United Way of the Battle Creek and Kalamazoo Region to announce July 24 it would discontinue $264,780 in
funding to the Douglass, an organization with deep historical and cultural roots in Kalamazoo's predominantly black Northside neighborhood.

James Liggins, chairman of the Douglass Community Association board, said the financial mismanagement stems from consistent cash-flow issues. The organization was not bringing in new money and was overstaffed. It was having trouble making payroll. Combined with that, the board “wasn't getting a clear picture about how bad the state of the finances were,” Liggins said.

“This wasn't a situation of someone doing something illegal,” Liggins said. “This was a situation of us (not) having accurate information. By the time we began asking the difficult questions we were in a real hole.”

Liggins said the organization did have a case two years ago where a staff member embezzled $15,000. He declined to state the circumstances, who the employee was or what role they held in the organization.

He said the employee was terminated and Douglass has recouped that money from an insurance claim. The board notified its funders at the time and put more checks into place to make sure that it would not happen in the future. Liggins said he sees the embezzlement case as a “one-off” and not the reason the organization is in its current financial predicament.

Sherry Thomas-Cloud,
executive director at the Douglass, said the finances were "a top priority" to
address when she arrived at the Douglass in April. She said the organization's
books "had changed many times with staff" in the past. She brought in a contracted bookkeeper to work on the finances, and had an accounting firm conduct an audit since there hadn't been one completed in the prior fiscal year.

"There are things still on the books that the finance committee and the board feel are not accurate," Thomas-Cloud said. "We just recently entered into an agreement with an accounting firm to take a look at things from the June audit that we feel need to take a second look."

Without finding new funding sources, Thomas-Cloud has said, the Douglass has about 30 days left to operate. United Way funding runs out on Aug. 31. Thomas-Cloud said she has received some commitments from people who are willing to give financial support to help the Douglass through this crisis.

"I want people to know that we don't intend to close and there are some very positive signs at this point based on community support that we will get through this crisis based on their help," Thomas-Cloud said.

Liggins said the board "is fighting tooth and nail to keep this organization going and alive for the community."

Founded in 1919, the Douglass houses several social service organizations and is home to a branch of the Boys & Girls Club, Kalamazoo Public Library's Alma Powell Brach and the NAACP. In 2011, the Douglass employed 53 people and had 35 volunteers, according to its tax return.

Former Douglass executive directors Tim Terrentine and James Greene declined to comment for this story.

'They've got to pull back'

Kalamazoo County Administrator Peter Battani has been on the Douglass board of directors for about two months. He also serves on an advisory committee of about 15 people Thomas-Cloud has put together to pull it out of this situation.

Battani said in 2000, he was on a community investment panel that makes recommendations for funding to United Way. He said he remembers then the committee having issues with the information Douglass officials were providing. He said he recalls the investment panel feeling like it was not getting adequate responses to its requests for information from Douglass.

United Way pulling funding puts the whole operation of the Douglass Community Association, an "anchor for a lot of kids on the north side," in question, Battani said. Battani said money mismanagement had been brewing at the Douglass "over a long period of time," not just in the last year or two.

"The United Way is such a large chunk of money that it threatens the closing of the Douglass," Battani said. "United Way is doing what United Way should do. They fund programs, and they're at a point where they're throwing money at the problem in a way that doesn't help it. They've got to pull back. By the same token, if Douglass closes there's no other organization on the north side that will pick up the slack."

The United Way's decision came just months after Thomas-Cloud arrived at the organization.

"Because of the significance and the dollar amount and not having other funders' dollars committed to (the organization) at this time, you can imagine we were very worried about the future of Douglass" when United Way made that decision, Thomas-Cloud said.

The Douglass will continue to be an affiliate of the United Way, Thomas-Cloud said.

"I think the Douglass board and the United Way want to continue a relationship even though the funding is not going to be there, in the short term," she said.

Sharp declines in revenue

Tax returns from the
Douglass show that in 2011 the organization's revenues declined sharply
compared to previous years. The Douglass brought in $740,315 in revenue to
fund its $1.1 million budget in 2011-12, almost $400,000 less than
the year before. Liggins attributed the 2011 decline to funds that had cycled through and were not renewable. He said he does not know of any other funders deciding against allocating funds to the Douglass.

While the Douglass' revenue has declined over the past five years, its
salaries and benefits costs have remained fairly level, finishing at $790,991
in 2011-2012.

Other than United Way, the
Douglass in 2011-12 had received funding from the Irving S. Gilmore
Foundation, the Kalamazoo Community Foundation, PNC Bank and Bronson Healthcare,
according to its tax return.

The Douglass in the past had
received Community Development Block Grant awards through the city of Kalamazoo
for its home repair program and summer youth program. This year, the agency
requested more than $300,000 for youth services, its home repair program and to
repair its gym roof, but did not receive any funding.

Tom Vance, director of
marketing communications at the Kalamazoo Community Foundation, said the
foundation made two lifeline grants to the Douglass -- $10,000 in 2010 and
$20,000 in 2011, and the organization's last major responsive grant was for
$200,000 in 2010.

"As the Douglass develops
its plan for the future, we are having conversations with them, along with
other past and potential funders, to explore ways we can be helpful,
financially and in other ways," Vance said.

Gathering place

Supporters of the Douglass have called it a safety net for the Northside neighborhood, a gathering place that meets critical needs of residents.

Thomas-Cloud said a mental health clinic at the Douglass serves about 80 patients. About 90 children participate in a two-week golf camp, and another 90 participate in rocket football. The Douglass serves 500 breakfasts and lunches a week as a United States Department of Agriculture feeding program, and serves another 400 to 500 people through a mobile food initiative.

Thomas-Cloud said Douglass' closing would cause an already under-served population to lose those services altogether.

"They wouldn't have a gathering place to access all these services," Thomas-Cloud said. "We are here with community partners that also provide critical services to folks that don't have access to things that middle class kids have."

Kalamazoo City Commissioner Stephanie
Moore, a volunteer for Mothers of Hope and a coordinator for other programs at
the Douglass, said the public library branch, two voting precincts and mental
health services the Douglass provides likely would not be available anywhere else on
the north side should the Douglass close.

"We open at 9 a.m.," Moore said.
"Most of the children stay there until the doors close at 8. For some of them,
that's the only place they eat, the place where they have a safe place to go,
and for some kids, to be able to use the restroom."

She pointed out that
Interfaith Homes, a low-income housing community that is home to about 400
children, is in the Douglass' back yard.

"We talk about violence,
keeping people off the streets, keeping guns out of children's hands," Moore
said. "We talk about healing mentally and physically of adults dealing with
substance abuse issues. All of those things have been addressed at the Douglass."

Thomas-Cloud said several professionals are helping Douglass
leaders with immediate and long-term strategic planning. Douglass' boards and
advisors are conducting fundraising on their own and Thomas-Cloud has talked to
potential funders.

"We are in conversations with potential funders at this time
and I'm very encouraged," Thomas-Cloud said. "The funders do not want to see Douglass
go away and they want to be supportive. We are in conversations at this time
talking about what kind of support they can give."

Thomas-Cloud said she also is planning events — a community forum will be held at the Douglass at 6 p.m. Aug. 19, and
a gospel benefit concert is planned for 4 p.m. Aug. 24 at Galilee Baptist
Church.

Moving forward

Even if the Douglass doesn't have to close, how do its leaders move forward and convince donors that they should support it?

"You get people involved who do engender trust, who can manage money, who do understand what needs to be done relative to the money," Battani said. "That's why Sherry is in the process of recruiting new board members, recruiting this new advisory committee."

Battani said another important piece is making sure the organization has "control mechanisms" in place so that the money is protected.

"You also have to remember that there are a lot of people, resources, institutions in this community that understand this, understand the seriousness of the situation on the north side and may come to its aid," Battani said.

The issue of having donors
trust the Douglass with their money is "a big concern," Thomas-Cloud said.

"Individual donors want to
know that their investment is going to be well spent, that it's going to be
money invested into a quality program and will serve a population they care about,"
Thomas-Cloud said. "I think the challenge and the opportunity for Douglass at
this point is that our systems are in place to ensure fiscal responsibility and
best practice."

That includes what
Thomas-Cloud has begun doing by enlisting a bookkeeper and contracting with a
CPA firm. She said the Douglass also needs to enlist knowledgeable advisors and
consultants.

"We need to focus on the financial aspect, but
we also need to make sure the programs that come out here are equally programs
of excellence" and responsible to funders and donors, she said.

Thomas-Cloud said she has
worked to address a concern of strained relationships with the Douglass' donors
and funders.

"It's a reputation that
needs to be rebuilt or newly built," Thomas-Cloud said. "There have been some
relationships that have been strained. I'm about rebuilding those relationships
with potential funders and donors, asking them about what is it I can do to
mend this? We need you as an organization so we can help the vulnerable
population we serve. At the end of the day it's about the kids."

Emily Monacelli is a local government reporter for MLive/Kalamazoo Gazette. Contact her at emonacel@mlive.com. Follow her on Twitter.